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Mealey's Insurance

July 13, 2023
Insurer Breached Duty To Defend; Fact Issues Exist On Damages, Panel Says

HARRISBURG, Pa. — A panel of the Pennsylvania Commonwealth Court determined that an insurer breached its duty to defend its insured from 2006 through 2010 against environmental contamination claims asserted by the Pennsylvania Department of Environmental Protection (DEP); however, the panel said it is unclear whether the damages sought by the insured were caused by the insurer’s breach of the duty to defend.
July 13, 2023
Supreme Court Directs Response To Insurer’s Challenge To Asbestos Bankruptcy Plan

WASHINGTON, D.C. — The U.S. Supreme Court has asked Chapter 11 asbestos debtors Kaiser Gypsum Co. Inc. and Hanson Permanente Cement Inc. to respond to a petition for certiorari filed by their primary insurer asking the court to decide whether the insurer has standing to challenge the debtors’ reorganization plan, after the debtors failed to file any opposition to the petition or waive their response.
July 13, 2023
No Coverage For Shareholder Suit Arising Out Of Listeria Contamination In Ice Cream

NEW ORLEANS — Insurers owe no coverage for a shareholder’s derivative suit filed against an ice cream manufacturer following the discovery of Listeria contamination in the insured’s ice cream products because the underlying shareholder suit fails to allege an occurrence and does not seek damages caused by bodily injury as required for coverage to exist, the Fifth Circuit U.S. Court of Appeal said in affirming a district court’s ruling.
July 11, 2023
Toxic Exposure Suit Must Be Dismissed For Failure To Show Causation, Judge Says

MADISON, Wis. — A lawsuit alleging that a property owner was negligent in storing gas and propane containers in a garage below one of the property’s bedrooms must be dismissed because the plaintiffs failed to show that their exposure to gas and propane fumes was the cause of their illness, a Wisconsin federal judge said in granting a motion for summary judgment filed by the property owner and an insurer.
July 11, 2023
No Coverage Owed For Negligence, Wrongful Death Suits Filed After Gas Explosion

SCRANTON, Pa. — A Pennsylvania federal magistrate judge granted an insurer’s motion for summary judgment after determining that no coverage is owed for underlying negligence and wrongful death suits arising out of a gas explosion allegedly caused by an insured’s negligent inspections because the insured’s successor company is not a named insured on the policies and because there was no occurrence during the applicable policies’ period.
July 10, 2023
Black Homeowners Say State Farm’s AI Discriminates Against Them

CHICAGO — State Farm Fire & Casualty Co. trained the artificial intelligence at the heart of its claims processing system with historically biased housing and claims data, making the program much more likely to flag claims by black homeowners and causing delays in repairs and other harms, plaintiffs tell a federal judge in Illinois in opposing dismissal of a class action.
July 10, 2023
Insured Entitled To Only $5,000 For Water Damage Claim, 11th Circuit Panel Says

ATLANTA — The 11th Circuit U.S. Court of Appeals on July 7 affirmed a district court’s ruling in favor of a commercial liability insurer in a water damage coverage dispute after determining that the insured is entitled to only $5,000 in coverage pursuant to a policy’s sewer coverage extension as the remainder of the damages are excluded by the policy’s water exclusion.
July 10, 2023
Insurer Is Entitled To Equitable Contribution In Environmental Coverage Dispute

PORTLAND, Ore. — An Oregon federal judge granted an insurer’s supplemental motion for summary judgment on the issue of allocation of defense and indemnity costs and equitable contribution after determining that an interim cost-sharing agreement between two insurers in an environmental contamination coverage dispute prevents the insurer from being reimbursed for excess costs that the insurer paid on behalf of the mutual insured.
July 10, 2023
No Coverage Owed For Contamination Caused By Release Of Petroleum

JACKSONVILLE, Fla. — No coverage is owed to an insured for contamination cleanup costs caused by the release of petroleum and other contaminants from an underground storage tank at a gas station because the insured failed to notify its insurer within seven days of learning of the presence of the contaminants in the groundwater as required by the policy, a Florida federal judge said in granting the insurer’s motion for summary judgment.
July 07, 2023
N.J. High Court Refuses To Review Ruling In Environmental Contamination Suit

TRENTON, N.J. — The New Jersey Supreme Court denied an insured’s petition for certification, refusing to review the New Jersey Superior Court Appellate Division’s ruling that a prior or pending litigation exclusion bars coverage for an environmental contamination lawsuit filed against the insured by the New Jersey Department of Environmental Protection (NJDEP).
June 30, 2023
Panel Reverses Ruling As To Collapse Claim, Affirms As To Hurricane Irma Claim

WEST PALM BEACH, Fla. — A Florida appeals panel held that insureds failed to satisfy their burden of showing hidden and unknown decay or insect damage to cause their ceiling collapse but met their burden of proof to support a jury’s verdict in their favor on their Hurricane Irma claim, reversing in part and affirming in part the insureds’ lawsuit against their homeowners insurer.
June 30, 2023
Insurer Says 3rd Circuit Properly Found Faulty Workmanship Is Not Occurrence

PHILADELPHIA — Rehearing of the Third Circuit U.S. Court of Appeals’ ruling in favor of an insurer in a dispute over coverage for damages to natural gas wells caused by the insured’s fracking work is not warranted because the panel correctly found that neither faulty workmanship nor failure to perform a contract in a workmanlike manner can be construed as an occurrence under the policy at issue, an insurer says in response to the insured’s petition for panel rehearing and rehearing en banc.
June 30, 2023
District Court Decision In Mold Coverage Suit Must Be Reversed, Insureds Say

ATLANTA — A district court’s ruling that no coverage is owed for mold damage discovered in an insured hotel should be reversed because the policy at issue provides coverage for losses caused by a construction defect even if the cost to fix the defect is not covered, the insureds say in an appellant reply brief filed in the 11th Circuit U.S. Court of Appeals.
June 30, 2023
Insurer Says No Coverage Owed For Bodily Injury Suit Caused By Rodent Droppings

RALEIGH, N.C. — A commercial general liability insurer asserts in a complaint filed in North Carolina federal court that it has no duty to defend or indemnify its insured for an underlying suit claiming that the insured’s failure to inspect its storage pod for rodent droppings resulted in the underlying plaintiff becoming infected with bacterial meningitis because its policies’ exclusions for communicable disease, fungi and bacteria and mold apply as a bar to coverage.
June 30, 2023
Insurer Owes Duty To Defend Against Legionnaires’ Disease Suit, Panel Says

ATLANTA — A district court correctly determined that an insurer has a duty to defend its insured against an underlying negligence suit arising out of exposure to legionella bacteria because the policies’ fungi and bacteria exclusions do not bar coverage, the 11th Circuit U.S. Court of Appeals said in agreeing with the district court’s finding that the exposure did not occur within a building or structure as required by the exclusions.
June 29, 2023
California Federal Judge Says Stay Of Water Damage Coverage Suit Not Warranted

RIVERSIDE, Calif. — A California federal judge denied a motion to stay filed by insureds in a water damage coverage suit alleging claims for breach of contract and bad faith after determining that the insureds failed to show that their insurer’s notice of removal to federal court was fraudulent.
June 29, 2023
Rhode Island’s Arbitration Act Does Not Apply To Appraisal Proceeding, Judge Says

PROVIDENCE, R.I. — A Rhode Island federal judge denied a homeowners insurer’s motion to compel an arbitration award, allowing an insured’s claims for breach of contract and bad faith to proceed, because Rhode Island’s Arbitration Act does not govern the appraisal proceeding in which the parties participated to determine the amount of an insured’s losses caused by water damage.
June 26, 2023
Pollution Liability Policy Is Excess Over Commercial General Liability Policy

DETROIT — A trial court did not err in finding that a contractor’s pollution liability insurance policy was excess to a commercial general liability insurance policy and that the commercial general liability insurer owes a duty to defend its insured against an underlying carbon monoxide poisoning suit stemming from the insured’s negligent repair of a furnace; however, the trial court erred in awarding the excess insurer attorney fees, costs and sanctions without first conducting a reasonableness hearing, the Michigan Court of Appeals said.
June 26, 2023
Panel Upholds Finding That Water Damage Suit Is Barred By Suit Limitations Provision

DENVER — The 10th Circuit U.S. Court of Appeals upheld a district court’s grant of summary judgment in favor of an insurer in a water damage suit after determining that the insured’s suit is barred by the policy’s four-year limitations provision and that insurer’s denial of coverage based on the policy’s exclusions for long-term water leakage and faulty workmanship does not constitute bad faith.
June 26, 2023
Contaminated Water Coverage Dispute To Remain In Connecticut, Judge Says

NEW HAVEN, Conn. — A Connecticut federal judge denied an insured’s motion to dismiss or to transfer a suit filed by its insurer and seeking a declaration regarding its coverage obligation to an insured distributor of a fire-suppressing foam for a subpoena served on the insured in an underlying multidistrict litigation seeking damages for bodily injuries and contaminated drinking water caused by the use of the foam, allowing the insurer’s suit to remain in Connecticut federal court.
June 23, 2023
Bad Faith Claim Against Builders Risk Insurer Cannot Proceed, Federal Judge Says

BEAUMONT, Texas — A Texas federal judge adopted a magistrate judge’s recommendation to grant a builders risk insurer’s motion for summary judgment on breach of contract and bad faith claims after rejecting the insured’s argument that the bad faith claim should proceed because the insurer was vicariously liable for its agent’s negligent procurement of the policy and estopped from denying coverage for interior water damage sustained at the insured’s warehouse while the roof was being replaced.
June 22, 2023
Suit Limitations Provision Bars Breach Of Contract, Bad Faith Claims, Panel Says

NEW YORK — The Second Circuit U.S. Court of Appeals on June 21 affirmed a district court’s ruling in favor of a homeowners insurer in a water damage coverage suit after determining that the policy’s suit limitations provision bars the insured’s breach of contract and bad faith claims.
June 21, 2023
Insurers’ Request To Limit $87.5M Punitive Damages Award Under Indiana Law Denied

SOUTH BEND, Ind. — An Indiana federal judge denied a request by insurers’ to limit an $87.5 million punitive damages award entered for an insured by a jury in a breach of contract and bad faith dispute stemming from the insured’s request for coverage costs related to the cleanup of polychlorinated biphenyls (PCBs) because the award is within the state’s statutory cap as the statutory cap applies to each individual punitive damages award, which is $12.5 million against each of the seven insurers named as defendants in the suit.
June 20, 2023
Insured Files Appeal In 3rd Circuit In Asbestos Bodily Injury Coverage Suit

PHILADELPHIA — An insured filed a notice of appeal in the Third Circuit U.S. Court of Appeal, seeking review of a district court’s ruling that the insured is not entitled to coverage for an underlying asbestos bodily injury suit under primary and excess policies because the insured breached the policies’ notice provisions by failing to notify its insurers of the underlying lawsuit until after a jury verdict was entered.
June 19, 2023
Insureds’ Motion To Stay Water, Mold Damage Suit Denied As Prejudicial

HARRISBURG, Pa. — A Pennsylvania federal magistrate judge on June 16 denied a motion to stay filed by insureds in a water and mold damage suit after determining that the motion is prejudicial to the administration of justice.